PESHAWAR – The Peshawar High Court (PHC) has struck down the Khyber Pakhtunkhwa Provincial Excise Duty (Unmanufactured Tobacco) Act, 2024, declaring it unconstitutional.
The verdict came after Pakistan Tobacco Company Limited (PTC) and other petitioners challenged the provincial government’s authority to impose excise duty on unmanufactured tobacco.
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The bench allowed the constitutional petition filed by PTC, represented by Barrister Ibrahim Khan Afridi and Lawangeen Khan, and held that the imposition of excise duty on unmanufactured tobacco under Section 15 of the KP Finance Act 2024 violated the constitutional framework.
The counsels argued that the levy was ultra vires of the Constitution of Pakistan, as Articles 141 and 152 clearly delineate the legislative powers between Parliament and provincial assemblies. They maintained that “duties of excise” fall exclusively within the federal domain under Entry No. 44 of the Federal Legislative List, and therefore, the KP Assembly’s move amounted to an unconstitutional encroachment into federal authority.
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In its defense, the Khyber Pakhtunkhwa government argued that the act had been imposed lawfully and did not contravene constitutional directives. The provincial side maintained that the Constitution does not explicitly prohibit assemblies from levying excise duties on certain items, such as tobacco, within their respective jurisdictions.
After detailed hearings, the Honourable Court declared that the legislation conflicted with constitutional principles governing fiscal authority, rendering the law invalid and without legal effect. The ruling underscores the constitutional boundaries between federal and provincial taxation powers, reaffirming the supremacy of the federal framework in excise matters.
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Legal and business communities have hailed the decision as a major precedent in defining provincial taxation limits. Experts noted that the verdict would bring much-needed clarity and predictability to the fiscal environment, boosting investor confidence in Khyber Pakhtunkhwa and across Pakistan.
